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Gold and Silver Trying To Break Up

man holding digital chart with arrows up and down

Fed Chair Powell was hawkish yesterday but more dovish in the conference call thereafter. Typical Fed speak. In the FOMC statement, he said, “Inflation remains somewhat elevated.” Then, in the call, he went on to say, “We don’t need to wait for 2% inflation to cut rates.” About as crystal clear as a blackboard.

Silver and GDX were basically flat. Silver rose 2%.

 

Gold Price Analysis: Key Levels and Trends

GOLD

Weekly Chart

gold chart 30 jan

Despite Gold testing the record high at $2802, the momentum indicators continue to point south.

 

Daily Chart

gold chart 30 jan

Both the RSI and the MACD Line are negatively divergent. The MACD Histogram is also heading down.

 

4-Hour Chart

gold chart 30 jan

The bear flag has been broken to the downside, aided by multiple negative divergences at extreme overbought levels. Gold has tried to break back up again, but to no avail yet. Back-test complete.

Meanwhile, the RSI and both MACDs continue lower.

In summary, everything is pointing lower, and only a close above $2802 for a couple of days can change that.

 

Sentiment and Positioning in Gold

  • SENTIMENT continues to be very bullish, but it is beginning to fall. It could pop one more time, but the risk is lower from here or a higher level.
  • POSITIONING: The Banks have the second biggest peak net short position in history, since records began in 2006. This is bearish. Only a total collapse of the COMEX and the LBMA could change this, but the last time that happened was 1999. Seeing is believing.

The Funds have their biggest net long position since Sept. 24, when Gold was at $2689.

 

Silver Price Forecast and Market Trends

SILVER

Weekly Chart

gold chart 30 jan

Multiple negative divergences signaled the top in Silver. The RSI and both MACDs continue south.

 

Daily Chart

gold chart 30 jan

There is a bull flag in Silver, and it is trying to break into a higher band but has failed so far. If it breaks up and continues higher, then that could be very bullish.

On the other hand, the 50-day moving average has broken the 100-day moving average, which is bearish.

The momentum indicators are going sideways, which means that it could go either way, up or down, from here.

 

4-Hour Chart

gold chart 30 jan

There is a bear flag on the 4-hour chart, which contradicts the daily chart, which makes it difficult to ascertain the next direction in Silver. However, Silver broke down and now it has turned back up. The RSI is near overbought and may be turning up, and both MACDs too.

$33.33 is the first resistance that needs to be broken to confirm the bullish scenario. By contrast, a drop below $30 would signal a drop to $28 at a minimum.

 

Silver Market Sentiment and Positioning

  • SENTIMENT in Silver is the most bullish since Oct. 30, when Silver was at $34.69, and it is also negatively divergent.
  • POSITIONING: The Banks have increased their net short position by 53% in just the past three weeks. Either they are trying to cap Silver’s rally or they are getting ready for a big drop, or both.

The Funds ramped up their net long position by 70% in three weeks. They are typically wrong.

 

Conclusion: What’s Next for Gold and Silver Prices?

Gold must close above $2802 for a couple of days to confirm the bullish path in the short term. Failure to do so and Gold is going down, potentially in a big way.

Silver needs to break out of its bullish flag on the daily chart to target $33.33 next. But if Silver breaks $30, the target is $28 next.


Buy gold and buy silver today to secure your financial future.


 

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About the Author

David Brady has worked for major banks and corporate multinationals in Europe and the U.S. He has close to thirty years of experience managing multi-billion dollar portfolios including foreign currency, cash, bonds, equities, and commodities. David is also a CFA charter holder since 2004.

Using his extensive experience, he developed his own process utilizing multiple tools such as fundamental analysis, inter-market analysis, positioning, Elliott Wave Theory, sentiment, classical technical analysis, and trends. This approach has improved his forecasting capability, especially when they all point in the same direction.

 

His track record in forecasting Gold and Silver prices since has made him one of the top analysts in the precious metals sector, widely followed on Twitter and a regular contributor to the Sprott Money Blog.

*The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.